South Sudan has suspended the use of the US dollar and instead called on all transactions be executed in the local currency, the South Sudanese pound (SSP), in a move projected to stifle economic activity in the war-ravaged economy.
Majority of transactions in the nations are done using the US dollar, largely due to hyperinflation and the volatility of the local currency.
However, the Bank of South Sudan has banned the use of the greenback and directed that all commercial contracts be signed in the local currency.
“That is a clear directive from the Central Bank that all the transactions in South Sudan must be done in our currency. So all commercial contracts must be signed in our local currency,” Michael Makuei Lueth, South Sudanese Information minister, said.
The latest directive by the Bank of South Sudan deals a major blow to importers, hotels, restaurants, travel and tour operators, and the operations of regional banks such as KCB, Equity, Stanbic and Co-operative, which are struggling to survive in an economy plagued by hyperinflation and political instability.
The directive on the use of South Sudanese Pound is one of the measures recommended by a committee appointed by President Salva Kiir to help address the country’s economic crisis.
A seven-year civil war that ended in 2020 affected the nation’s economy as oil production in areas affected by the conflict collapsed.
South Sudan is the major oil producer in the East African region, but its near-total dependency on the oil has made the resource a curse.
Due to fees and obligations owed to oil firms, the 170,000 barrel-per-day production means the country only earns value worth 50,000 barrels of oil per day, with the larger amount going into advance payments or contractual obligations.